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Ciena (CIEN) Q2 Earnings & Revenues Top Estimates, Rise Y/Y

Ciena Corporation CIEN reported second-quarter fiscal 2023 (ended Apr 29) results, wherein adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate of 60 cents. Earnings improved 48% year over year.

Quarterly total revenues were up 19.3% year over year to $1,132.7 million. The top line surpassed the Zacks Consensus Estimate by 4.4%.

Non-telco customers contributed nearly 42% to revenues in the reported quarter. One customer represented 10.9% of total revenues in the fiscal second quarter.

However, the company has highlighted that certain buyers including large North American service-provider customers are pushing out orders into subsequent quarters as they scrutinize their budgets amid economic troubles. Ciena lowered its revenue guidance for fiscal 2023. It now expects revenue growth in the range of 18-22% compared with the earlier guided range of 20-22%.

Following the announcement, shares slumped 10.8% and closed the session at $42.39 on Jun 6. In the past year, shares have lost 12.9 % compared with sub industry’s decline of 12.9%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Segment Results

Total revenues in Networking Platforms (80.8% of total revenues) increased 24.6% year over year to $914.9 million.

Platform Software and Services’ revenues (6.1%) totaled $69.4 million, up 0.4% from the prior-year quarter’s levels.

Blue Planet Automation Software and Services’ revenues (1.8%) improved 21.9% to $20.6 million.

Total revenues in Global Services (11.3%) were $127.8 million, down 0.7% year over year.

Region-wise, revenues in the Americas were $794.4 million, up 13.4% year over year. Europe, the Middle East and Africa generated $173.4 million revenues, up 19.5% from the prior-year quarter’s levels. Revenues in the Asia Pacific totaled $164.9 million, up 59.6% from the prior-year quarter’s figure.

Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote

Other Details

Non-GAAP adjusted gross margin was 43.7% compared with 43% in the year-ago quarter. Adjusted operating expenses were $338.1 million, up 12.3% from the prior-year quarter’s levels.

Non-GAAP adjusted operating margin was 13.8% compared with 11.3% in the prior-year quarter. Non-GAAP adjusted EBITDA increased 39.7% year over year to $180.6 million.

Cash Flow & Liquidity

For the quarter ended Apr 29, Ciena’s net cash generated from operating activities was $230 million compared with $106 million in the prior-year quarter.

As of Apr 29, the company had $1.34 billion in cash and investments and $1,546.4 million of net long-term debt.

Guidance

For the third quarter of fiscal 2023, management expects revenues in the range of $1-$1.08 billion. The adjusted gross margin is estimated to be low 40%. Adjusted operating expenses are estimated to be $335 million.

For fiscal 2023, adjusted gross margin is estimated to be between 42% and 44%. Adjusted operating expenses are now estimated to be $1.33 billion, slightly higher than the previous forecast. This is mainly due to increasing investments for TAM expansion, noted the company.

CIEN plans to repurchase shares worth $250 million in fiscal 2023. It repurchased $500 million worth of shares in fiscal 2022.

Zacks Rank & Stocks to Consider

At present, Ciena carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are Dropbox DBX, Badger Meter BMI and Blackbaud BLKB. Dropbox and Blackbaud presently sport a Zacks Rank #1 (Strong Buy), whereas Badger Meter holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 10.1% in the past 60 days to $1.85 per share. The long-term earnings growth rate is anticipated to be 12.3%.

Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.4%. Shares of DBX have gained 6.5% in the past year.

The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have surged 34.4% in the past year.

The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has increased 9.3% in the past 60 days to $3.75 per share.

Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 10.4%. Shares of BLKB have improved 25.3% in the past year.

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